Barriers to employment holding small businesses back

Small businesses are saying that despite recent tough conditions, they are looking forward to growth in the next 12 months, off the back of improved economic and political certainty, however many are reluctant to grow by hiring staff due to too many policies and procedures.

Although small businesses are matching the wider economy in growth terms, they are falling behind in increasing their employee headcount, with one third (31%) of respondents employing fewer people today than 12 months ago, according to the latest Westpac Small Business Report in collaboration with Deloitte. The most common hurdles to hiring are financial (38%), only needing help occasionally (28%), and wages and penalty rates (24%) – suggesting more support is needed across industry and government to help businesses break down employment barriers.

Ganesh Chandrasekkar, General Manager of SME Banking at Westpac said: “Many small businesses faced tough conditions over the last six months with a slowing economy and tightening margin pressure, however there is some light at the end of the tunnel which can help boost employment.

“Given recent RBA interest rate cuts, a boost in infrastructure spending and a better-looking housing market, many small businesses say they are optimistic about the coming 12 months. “One way to boost confidence back into the market is to remove the complexities and challenges small businesses face when it comes to hiring. If every employing small business took on one additional staff member, that is 900,000 jobs. Even if we could create a fraction of that amount by removing employment barriers, it would make a big difference,” Chandrasekkar said.

To supplement household income, one third of small businesses have taken on a second job or ‘side hustle’, revealing their most common fear is having no financial security. This is particularly common 1 ABS (2019), 8165.0 – Counts of Australian Businesses amongst non-employing businesses (41%), female small business owners (40% compared to 25% of males) and industries feeling more exposed in the current environment such as agriculture (52%) and arts (45%).

Many small businesses are taking advantage of the gig economy to embrace on-demand solutions that provide flexibility and easier access to casual employees, and it’s growing quickly – increasing 68 % in revenue terms in one year in NSW2 . However, one in five (20%) small business owners have no income outside their business and 15% would lose equity in their home if their business were to fail. The average small business household gets two thirds (63%) of income from the business.

“This places an extraordinary amount of pressure on business owners, their families and employees, for the business to perform. With over half of Australian small business owners using their personal savings to establish their business, this can have a deep impact on their mental and financial wellbeing,” Chandrasekkar said.

About Deloitte

With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges.For more information, visit www.deloitte.com.au. Deloitte Access Economics is Australia’s pre-eminent economics advisory practice and a member of Deloitte’s global economics group. For more information, please visit: www.deloitteaccesseconomics.com.au.

SHARE THIS ARTICLE

FURTHER READING

SMEs can save money while getting greener

This week marked the beginning of the 28th Annual Climate Change Conference of the Parties – COP28 in Dubai. As the global community continues to face an increase in natural

Brisbane Christmas Trading Hours

With Christmas just around the corner, spare time seems to be in very short supply. To accommodate this seasonal flurry, Brisbane’s major shopping centres have extended their opening hours, giving

Sydney Christmas Trading Hours

As we rapidly approach the festive season, with Christmas merely days away, the urgency to finalise our holiday shopping intensifies. Recognising this seasonal hustle, numerous prominent shopping centres in Sydney

Perth Christmas Trading Hours

With Christmas swiftly approaching, Perth’s bustling shopping scene is ready to accommodate your festive shopping needs. In a boost for holiday shoppers, Perth’s major shopping centers are extending their hours,

Melbourne Christmas Trading Hours

As both a retailer, and a consumer, we understand how stressful the lead up to Christmas can be. Scrambling to finalise gifts for your loved ones while social commitments are

Adelaide Christmas Trading Hours

With Christmas just around the corner, we understand how vital it is for you to complete your festive shopping smoothly. To aid in this endeavour, Adelaide’s prominent shopping centres have